AstraZeneca accused of tax avoidance in Dutch scheme
pharmafile | October 14, 2015 | News story | | AstraZeneca, finance, tax, tax avoidance
AstraZeneca is the latest international firm to be accused of corporation tax avoidance, after an investigation claimed the firm is channelling billions of pounds through Dutch subsidiaries.
The Guardian alleges that it has uncovered evidence showing AstraZeneca set up a Dutch lending operation in 2013, and channelled £1.8 billion of internal group loans through the Dutch arm, charging interest of more than $140 million a year.
The company then registered huge tax breaks in the UK and the Netherlands through a process known as ‘double dipping’, in order to claim a deduction on the same payment twice.
As a result, the company did not pay corporation tax in the UK, even though it posted global profits of $4.5 billion in 2013 and 2014.
Tax experts say that it was difficult to determine exactly how much AstraZeneca will benefit from the Dutch avoidance strategy, because it all depends on how well the company uses its current tax credits.
Still, the company set up the Dutch arrangement less than five months after the UK made changes to limit its the Treasury’s ability to crack down on tax avoidance by international businesses. During this time AstraZeneca’s vice president of corporate finance, Ian Brimicombe, sat on a Treasury committee and was a key advisor to the Government on changes to the law.
The company told The Guardian: “AstraZeneca acted on the UK legislation introduced … to give companies greater freedom in managing overseas financing operations.
“The use of this UK government-sponsored regime for tax planning purposes did not produce any tax savings for AstraZeneca. In 2013 and 2014, the AstraZeneca UK group of companies was not profitable due to patent expirations and continued investment in the research and development of new medicines.”
AstraZeneca is far from the only company using tax-avoidance strategies. Shire and Valeant have recently come under fire for employing similar tactics, funnelling money into a foreign structure to enjoy lower tax rates.
In February, a report by the Public Accounts Committee found that Ireland-based Shire situated a few employees and a chunk of its cash in Luxembourg. Valeant uses an address in Luxembourg to cut millions off the tax bills for Salix, which it acquired earlier this year.
Yasmita Kumar
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